TSMC allocates a record $44 billion to expand chip manufacturing in 2022

Chip maker Taiwan Semiconductor (TSMC), which supplies silicon to Apple, Qualcomm and other tech giants, plans to spend up to $44 billion to increase its manufacturing capacity in 2022, Reuters reports. The Taiwanese company said in its latest earnings statement that it expects capital spending to range between $40 billion and $44 billion in 2022, up from the previous record of $30 billion in 2021.

It’s not a wholly unexpected increase, given the company’s previously announced plan to spend $100 billion expanding its manufacturing capacity through 2023. But the record amount suggests it doesn’t expect chip demand to slow any time soon, despite some analysts warning of the potential. The slowdown in areas such as smartphones, and financial times Notes.

TSMC’s logic is that any slowdown will be offset by more product categories such as automobiles and factory equipment that begin to demand high-performance silicon. Company CEO CC Wei said, in the comments posted by FT.

TSMC expects demand to remain high regardless of whether the global chip shortage continues, with Wei noting that it “may or may not continue” in 2022, Nikki Asia reports. The company expects overall chip industry revenue to grow 20 percent this year, but TSMC will outpace it with revenue growth in the high 20 percent range. Its revenue grew by 25 percent last year.

TSMC expects this growth even as one of its customers, Intel, begins to compete with the company’s contract chip manufacturing business under its new CEO Pat Gelsinger. here BloombergTim Culpan talks about why Intel may not be a direct competitor to TSMC (or its closest competitor, Samsung) anytime soon:

Intel follows both in technology prowess, forcing the Californian to take the ridiculous position of relying on TSMC to produce its best chips. Gelsinger is confident he can catch up. Perhaps he will, but there is no way the company will be able to expand its capacity and economies of scale to the point of financial competition. In other words, Intel will need to sacrifice margins to get the volume needed to fill the fab that it, too, would like to build.”

The massive demand for chips, not to mention the lack of chips, helped solidify TSMC’s position as one of the world’s largest and most important companies (in fact, Colban notes that it is “the largest non-state-owned, non-US corporation”). And with its ambitious expansion plans, which include new plants in Arizona and Japan, that doesn’t seem likely to change.

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